WASHINGTON—An influential Washington think-tank is criticizing Myanmar’s government for presiding over a ‘humanitarian catastrophe’ in western Rakhine state and doing little to track down perpetrators of Buddhist-on-Muslim violence around the country.

Those criticisms come in a very mixed assessment by the Center for Strategic and International Studies of the situation in Myanmar, three years after it began a historic transition to democracy from decades of oppressive and ruinous military rule.

The centrist think-tank , which has the ear of the Obama administration, visited Myanmar in August and issued its report Wednesday. President Barack Obama, who counts U.S. support of the Southeast Asian nation’s reforms as a foreign policy success, will make his second visit to Myanmar in two years when it hosts a summit of regional leaders in November.

The report points to some hopeful signs in Myanmar, which is gearing up for elections in late 2015. It cites prospects for a nationwide cease-fire in long-running ethnic conflicts, improvements in a woeful health care system and economic reforms that have spurred rapid growth.

But the report also says power is deeply skewed in favour of the military, and that decision-making on key political reforms has stalled. It says that likely reflects a struggle between ‘reformists’ allied to President Thein Sein—the former general who has overseen the shift to democracy—and establishment interests who fear losing privileges through more change.

‘It is not yet clear that the military’s overwhelming dominance will diminish significantly as the current government approaches the end of its formal tenure in April 2016,’ the think-tank says.

The report says massive human suffering continues in Rakhine, where 140,000 stateless Rohingya Muslims have been rounded up into barbed-wire-enclosed camps after sectarian violence erupted in mid-2012 with majority Buddhists. It said for months the Myanmar government has ‘abdicated its leadership responsibilities’ as worsening violence drove international humanitarian groups out.

The government’s action plan to address the situation in Rakhine—criticized by human rights groups as discriminatory—puts forward ideas for peaceful coexistence, citizenship and resettlement, but it remains to be seen if the government can defuse the crisis, the report says.

In the past three years, the United States has led the charge as Western nations have re-engaged with Myanmar and rolled back sanctions, and Wednesday’s report advocates continued American engagement despite congressional concerns over Myanmar ‘backsliding’ on reforms.

The report calls for the U.S. to double health aid to Myanmar, including in the fight against drug-resistant malaria, and to sustain limited U.S. engagement with the military. It says however, those ties shouldn’t be expanded before it’s clear the military hasn’t intervened in the elections.